Islamabad, January 14, 2025: The federal cabinet, led by Prime Minister Muhammad Shehbaz Sharif, has approved revised agreements with 14 Independent Power Producers (IPPs), paving the way for a potential reduction in electricity prices by up to Rs. 11 per unit.
In an official statement, the cabinet endorsed the Power Division’s proposal to renegotiate terms with these IPPs, resulting in a reduction of Rs. 802 billion in profits and costs. The new agreements include a Rs. 35 billion deduction in excess profits accrued by the IPPs in previous years. Of the renegotiated IPPs, 10 operate under the 2002 Power Policy, while four were established under the 1994 Power Policy. Additionally, the agreement with one IPP under the 1994 policy has been terminated.
The revised agreements are expected to generate annual savings of Rs. 137 billion, with total projected savings of Rs. 1.4 trillion over the duration of these contracts. These savings are expected to directly benefit consumers by reducing circular debt and lowering electricity tariffs.
Prime Minister Shehbaz Sharif hailed the renegotiated agreements as a “major achievement,” underscoring their role in protecting the national treasury, addressing circular debt, and reducing electricity costs. He commended the efforts of the Power Minister, Advisor, Secretary, and the task force members for their successful negotiations.
In addition to reforms in the energy sector, the federal cabinet approved the merger of the Ministry of Narcotics Control with the Ministry of Interior, in line with recommendations from the government rightsizing committee. Following the merger, the Narcotics Control Division will function as a wing of the Ministry of Interior, with the Anti-Narcotics Force operating as an attached department. This merger is expected to save Rs. 183.25 million annually by streamlining administrative and operational costs.
The cabinet also approved the integration of the Aviation Division into the Ministry of Defence, noting that civil aviation matters were previously managed by the Defence Ministry until 2013. This merger aims to enhance airspace management and is expected to save Rs. 145 million annually in administrative and operational expenses.
Further decisions included amending the Public Procurement Rules, 2004, through the introduction of Section 45-A, which allows procuring agencies to delegate the procurement process, in whole or in part, to another agency.
The cabinet also approved the National Commission for Minorities Act 2024, as recommended by the Ministry of Human Rights, for submission to Parliament. Additionally, it extended the tenure of Dr. Muhammad Bashir as Member Technical of the Environmental Tribunal Islamabad for two years on a contract basis, as proposed by the Ministry of Law and Justice.
These measures, Prime Minister Sharif emphasized, align with the government’s policy of austerity, ensuring operational efficiency while reducing unnecessary expenditures.
